Saturday, February 28, 2015

A review of my counters performances

The earning reporting season is almost over, I thought I look back at my buy reasons, to see if there are still valid. As for sell reasons, it could be target is exceeded or buy reasons no longer valid. Let's do this in a more relaxed star award style. Interviews with winners are my imagined conversationsMost Lucky Award
Winner:1) The lucky switch from Golden Agri to China Merchant Pacific HoldingI sold Golden Agri at 55 cents. It is not because there is something I think is wrong with Golden Agri, but that I want my portfolio to be income generating and not so much for pure capital gains. Of course, I don't mind capital gain and income generation.I would have been sitting on paper loss and missing out on China Merchant Pacific Holding gain and income.China Merchant Pacific Holding buy reasons.1) Sustainable 7% yield2) Dilution from CB will lead to yield accretive acquisition which would either offset one another or result in net gain.3) Strong FCF generation.In the latest report, CMPH has already turnaround Jiurui it seems, with a 12 million contribution from Jiurui. and in its review it is state "negative goodwill amounting to HK$22.8 million arising from the acquisition of Jiurui Expressway. "So jiurui actually still making a loss of 10 mio??? Net Gearing Worsen, but will improve with the conversion of the CB, assume no further take up of loans, net gearing will be below 0.3.I do have some questions which I posted on valuebuddies, reader can look at the link on the right to go to valuebuddies to read the answers (if any). The questions are:It is stated that Jiurui contribute 12 mio to profits, and in its review it is state "negative goodwill amounting to HK$22.8 million arising from the acquisition of Jiurui Expressway. "So jiurui actually still making a loss of 10 mio??? correct? I thought the Jiurui's turnaround is super fast, until I saw that statement.Also it states that Guihuang Highway ". Profit contribution from Gui Huang joint ventures increased 8.7% to HK$134.2 million, mainly attributable to higher toll revenue and other toll road related income achieved,But the traffic vol for road is actuall lower. I am not sure how to comprehend the numbers with the statement, can someone enlighten me?Interview with winner of Most Lucky Award, CMPH:What is the secret of your success?CMPH:My secret? I don't go to ah longs to borrow money. I go buy peers who go to ah longs to borrow money, because I have a rich parents, I say I want to borrow money, the banks give me great rates. So, when I change the ah long rate to better rates, I make money, just like what I did for JIurui!Also, I have plenty of tricks up my sleeve. I have convertible bonds, now I have bonus issue. You don't know what I am up to right? That's why I am successful, because I am the deep one LOLMr Market Laughing Award Winner:Lee metals. I got almost everything about Lee metals correct. It will be able to navigate the current low steel price environment with 1 cent EPS, Q4 dividends is 2cents, the mid point of the range of between 1.5 cents to 2.5 cents.I expect operating numbers to worsen, and indeed CCC is bad. (See previous post). I need the AR to know if there is impairment to inventory. I would rather Lee metals do it and still eked out a profit as there is the conservative thing to do. I expect Mr Market to re-rate the stock to take into account the generous dividends and ability to navigate down cycle of the steel industry.But nope, price hardly move. You get all the reasons right but still lose. So Lee metals get my Mr Market Laughing at me award.Interview with winner of Mr Market Laughing AwardHow do you feel about getting this badge of shame? I mean fame.Lee metals:Please look at my track records. I have been in this line for donkey years. Mr market can laugh all he want, stay with me, I will keep paying you dividends. Show me a company that do that. Oh, I mean show me a company that do that and do it every quarters but is not a reit or trust. Oh, what? There is UMS? Go court her la! Most Attitude Company awardWinner: Venture.Venture is a company that many believed is a yesteryear company. Maybe it will be a long long time before it returns to its glory of a hot grow stock with PE of above 20. But it is no creative indeed. It has shown consistent quarter to quarter and year to year growth in gross profits for 2 years. Had the tax incentives for its subsidiaries not expired, its net profits would be even higher.

Why is it "attitude" then?

Because it doesn't care what other think.

SSH Aberdeen Asset Management PLC has been selling and selling, causing a drag in shares price whenever it rebounded. Maybe they know something that retailers do not know, but heck, Share price just keep recovering and going higher.

When there is expectations that the 3D printing will turn the fortunes in its Printing and Imaging Segment once the prototype for Straya 3D system in Shanghai goes into formal production, there is no updates on it. Looking at Q4 weaker results in this segment, it made one wonder if the 3D prototype has failed. Instead it boasts about its capability in its "test and measurement/ life science and medical segement" and has the audacity to ask the whole Singapore of precision manufacturing to look into this area and create eco-system around it.

Also, given that payout is almost 100% of its earning and above 100% of its FCF if we include expansion capex used in new factory/property purchases. Do that have the sustainability to keep paying if their earnings do not continue to improve over the few years? But nope, its the third year that they almost or pay more than their earnings, and no matter what others think, Venture do as they like.

Interview with winner of Most Attitude Company award How do you feel about getting this award?Venture:You guys are funny, I sustain dividend payout, you think I am not prudent, worry about FCF etc, if you cut dividends, you guys will cow bei cow bu even more right?Look, I am successful in diversifying more customers base, my new customers are helping to offset the weaker orders from my old customers. But look, we are progressing. What, orders from existing customers will get smaller and smaller? You are trying to trap me right? Last time, I say I expect recovery in the 2H, and it didn't happen, you reporters, analysts were on my neck, say and think I "dua bao sian", now of course I give those generic useless outlook comments that can go both ways, so heads or tails I can also say: there I tell you so!Aiya, I very busy la, don't disturb me already. Aberdeen already always bothering me, telling me Net margin should be above 6%, ask him to come run the busines la.

Falling Knife awards The climax! Falling knives award! We have 3 award winners this year!1) Sembcorp industries2) ST engineering3) Lippo Mall Retail trustSembcorp's subsidiary Sembmarine is from the O and G sector, so with the collapse of the oil price, and the possible fallout from Brazil Petrobras, in terms of drill ship orders, it is little wonders market think Sembcorp Industries has a bleak outlook.Well, bottom fishing is always also a game of knife catching, Sembcorp Industries not only have problems with Sembmarine, Its Singapore utilities business is also facing headwinds in term of competition and rates. Double whammy if you like. But as long as Brazil Petrobras don't cancel orders, with its big orderbook and its overseas utilities projects coming online over the next few years, Sembcorp utilities do look like it have 2-3 years window to ride out the cycle unscathed. ST engineering is a big company with many businesses, when I bought the company, I believed the growth drivers to come from aerospace and electronics, especially in the AMM segment and the Large Scale System segment of aerospace and electronics. These 2 segments did not disappointed, but these 2 segments are small in proportion to the other segments in aerospace and electronics. A oversight in research. Would I have bought ST engineering at the same entry price if I think the pockets of growth are relative small? I am not sure. Also the MRO segment of aerospace is really bad, as with the Automotive segment of Kinetics. I thought defense segment is all weather business. I am wrong. Of all the counters I have, ST engineering is the one that spring the most surprises in terms of results. Whenever Lippo announced an acquisition exercise, it will be meet with heavy dose of skepticism, and the bad track record of value-destroying fund raising. I however think Lippo did relative better this time round compared to the past. But compared with the deal CMPH closed on Jiurui, Lippo mall retail trust can really learn a thing or two. All 3 winners of Falling Knifes award refused interview. Most Resilient Newcomer Award Winner:Industrial reits- Ascendas Reit and Maple Tree Industrial ReitBoth are recent addition of less than 9 months.Industrial property outlook is poor as compared to commercial, retail, hospitality etc. When I buy, I expect to hold it for the longer term and is willing to sit through slight capital loss as I collect dividends and await the cycle to turn.However, not only has the operating numbers and payout not disappoint, it has not suffered capital loss, even as I collect the dividends. I do hope they can continue their solid performance so that I can continue to milk them--------------------------------------------------In conclusion of the sillyinvestor's star counter award, what are the counters that Sillyinvestor Inc will terminate contract? (Sellout)None. Any that will suffer possible renegotiation of terms? (Reduce size)
Yes.

1) All falling knifes awardees

Any that will be sold and transfer to other Inc for a profits.

Not at current prices, but if prices continue to raise for another 10% or more, possible transfers include:

I am glad u like it. Actually, there is one advantage in writing this way. Frankly, I am not a number person while I can dissect a lot of numbers with a lot of models etc. So I do a bit of qualitative writing in this fun way.

Well done Bro, if all the reports are like that, I'm sure to read them all in details ;)

I had two counters similar to yours, steng and Sembcorp. Bochup lah, if drop lower, I'll activate to buy more. If it goes up higher, then I'll just sit on my initial position. As long as you don't bet your entire portfolio in these 2 counters, I don't see how bad it can go :)